NEW YORK (Reuters) – Credit Suisse Group AG (CSGN.VX) has dismissed a trader who cost the bank roughly $6 million in losses from “unusual trading activities” that are being looked at by regulators, the Wall Street Journal reported on Thursday.

The Swiss bank dismissed Rohit Jha, an exchange-traded-funds trader, this week and suspended his boss, Matthew Tagliani, the Journal said, citing people familiar with the matter. The trades occurred last year and sparked an investigation and attracted scrutiny from Britain’s Financial Conduct Authority, the paper said.

“As soon as Credit Suisse discovered unusual trading activities by one trader on its London Equity Division Exchange Traded Funds desk (ETF), the Bank promptly notified the relevant authorities and has been cooperating with its regulators,” spokesman Jack Grone told Reuters. “We are confident the trader acted alone and that the matter has been contained.”

Grone said the bank determined that no clients were affected, and that the impact on profits was less than $6 million (GBP 4 million).

NEW YORK (Reuters) – U.S. stocks finished lower on Thursday as the Federal Reserve’s statement the day before added to investors’ anxiety about the timing of a pullback in its stimulus program.

While it was a second consecutive day of losses for the market, all three major indexes ended October with solid gains.

Dragging on the Dow and the SP 500, Visa Inc (V.N) lost 3.5 percent to $196.67 after the world’s largest credit and debit card company reported a 28 percent drop in quarterly profit.

The U.S. central bank on Wednesday said it will keep buying $85 billion of bonds per month, citing weaker economic signals, but it removed a phrase from a previous statement expressing worries about credit conditions, which some investors interpreted as a sign that the Fed could begin tapering earlier than expected.

“That leaves tapering on the table for December,” said Michael O’Rourke, chief market strategist at JonesTrading, in Greenwich, Connecticut.

Before the Fed’s meeting, many market participants were anticipating that the stimulus plan would not change until at least early next year.

The Fed’s accommodative monetary policy in recent years has contributed to the stock market’s rally.

The Dow Jones industrial average .DJI fell 73.01 points, or 0.47 percent, to close at 15,545.75. The SP 500 .SPX lost 6.77 points, or 0.38 percent, to finish at 1,756.54. The Nasdaq Composite .IXIC dropped 10.91 points or 0.28 percent, to end at 3,919.71.

The SP 500 closed near its intraday low, with a wave of end-of-session selling marked by sell-order imbalances near the close.

“This was more of an order flow thing,” said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. “Some participants, some institutions wanted out big time, and they got out.”

For the month, the Dow gained 2.8 percent, the SP 500 added 4.5 percent and the Nasdaq rose 3.9 percent.

The SP 500 is up 23.2 percent for the year so far.

“It’s already at nosebleed heights and it could go higher, but people are focusing on the rewards and not the risks,” including ongoing weakness in the economy,” said Uri Landesman, president of Platinum Partners in New York.

Among the day’s gainers, shares of Exxon Mobil Corp (XOM.N), the world’s largest publicly traded oil company, helped support the Dow and the SP 500, rising 0.9 percent to $89.62 after the company reported adjusted third-quarter earnings that beat expectations.

Expedia (EXPE.O) jumped 18 percent to $58.97 and ranked as the SP 500’s best percentage gainer, a day after reporting third-quarter earnings that exceeded expectations.

Facebook (FB.O) reported strong growth in its mobile advertising business late on Wednesday, though it said it didn’t plan to boost the frequency of ads shown to users. Facebook’s stock rose 2.4 percent to close at $50.21.

With results in from 355 companies in the SP 500, 68.2 percent have topped Wall Street’s expectations, above both the 63 percent beat rate since 1994 and the 66 percent beat rate for the past four quarters, according to Thomson Reuters data.

Revenue performance has been weaker, however, with 53.6 percent of companies exceeding expectations, shy of the 61 percent beat rate since 2002, but above the 49 percent rate for the past four quarters.

Thursday’s economic data was mixed. A gauge of business activity in the Midwest surged past expectations in October, while weekly initial jobless claims dipped in the latest week.

SIENA, Italy (Reuters) – The top shareholder in Monte dei Paschi dei Siena (BMPS.MI) is open to the idea of a merger of the troubled Italian bank with another financial group, preferably “of an international standing”, it said in a document approved by its board this month.

The comment is a major strategic shift for the Monte Paschi foundation, a not-for-profit body with close ties to local politicians, which now has a 33.5 percent stake in the world’s oldest bank after being forced to sell down its majority holding to pay off its debts.

The bank in turn risks nationalization unless it can persuade private investors to buy into a 2.5 billion-euro ($3.4 billion) share issue next year.

Its share price extended gains after parts of the document were leaked and closed 6.6 percent higher at 0.2330 euros.

The cash-strapped foundation, which has its Monte dei Paschi stake valued at 0.24 euros per share in its books, is seeking to reduce its holding in the bank to pay back 350 million euros of debts and has already said it will not take part in the capital increase.

In the document, dated October 15 and setting out its strategic priorities through 2017, the foundation said it did not want to sell its stake “in dribs and drabs”. At current market prices it would have to sell a stake of nearly 15 percent to fully repay its debts.

It said among the options it was considering were selling on the market or to one or more investors. It also mentioned the possibility of “extraordinary operations, such as a merger (of the bank) with other financial groups, preferably of international standing.”

In a statement late on Thursday, requested by market watchdog Consob, the foundation said leaks about the content of the document had been published in a “disorderly and fragmented” manner.

It posted on its website the full document, which also lists as options under consideration the renegotiation of its debt terms with creditors and the selling of all its financial and real estate assets.

Banking sources say the foundation must find a buyer for a big chunk of its stake quickly, because the looming share issue could put pressure on the price. ($1=0.7262 euros)

(Reuters) – American International Group Inc reported an underwriting loss in its property and casualty business in the third quarter, sending its shares down 3 percent in extended trading.

The U.S. insurer, which was almost wiped out by its derivative bets in the housing crash five years ago, reported a better-than-expected operating profit.

Insurers have had trouble raising prices in their property and casualty businesses for some time, and losses from weather events and other natural disasters have also hurt the business.

Net premiums earned in the company’s property casualty unit fell 4 percent to $8.43 billion in the quarter ended September 30, while combined ratio improved 3.4 points to 101.6, indicating the business still not booking an underwriting profit.

A combined ratio below 100 indicates an underwriting profit, meaning an insurer is receiving more in premiums than it is paying out in claims.

AIG declared a 10 cent quarterly dividend. It restarted paying dividends earlier this year for the first time since receiving a $180 billion taxpayer bailout in 2008. It finished paying back those funds early this year.

The company’s net income rose 17 percent to $2.17 billion, or $1.46 per share, from a year earlier.

On an operating basis, the company earned $1.4 billion, or 96 cents per share.

Analysts on average had expected earnings of 94 cents per share, according to Thomson Reuters I/B/E/S.

AIG shares were at $50.35 in trading after the bell after closing at $51.65 on the New York Stock Exchange on Thursday.

(Reporting by Aman Shah in Bangalore and Luciana Lopez in New York; Editing by Maju Samuel)

LONDON (Reuters) – The future of Royal Bank of Scotland (RBS.L) should become clearer on Friday, with Britain’s finance ministry expected to reveal if it wants the state-backed lender to be broken up.

Bankers and political sources say the most likely outcome is that RBS, 81 percent-owned by the government, will agree to create an internal ‘bad bank’ to house more of its problem loans, with the government deciding against a formal break-up.

The plan would see its existing non-core unit, home to bad loans worth 45 billion pounds ($72 billion), enlarged and revamped, with the run-down of those assets accelerated.

RBS Chief Executive Ross McEwan, who took up the role at the beginning of last month, will set out his vision for the bank publicly for the first time. RBS will also unveil its third-quarter results.

McEwan is expected to consider various options aimed at refocusing the bank on domestic lending, including speeding up the planned sale of its U.S. business, Citizens, and further slimming the bank’s investment activities.

A detailed strategic review is not expected until RBS’s 2013 results in February.

But Sky News, citing sources, reported that McEwan is expected to say the bank is undergoing a review that could mean substantial cost reductions, including job cuts, and the further shrinking of its investment banking arm.(link.reuters.com/myb44v)

Sky said RBS was likely to signal it is starting talks with the Treasury on reinstating dividend payments by buying out an instrument, called a dividend access share, that gives the state priority over dividends and has been seen as a major obstacle to privatization.

Sky added that it could take several years before regulators in Brussels approve the deal, expected to cost well over 1 billion pounds.

Another perspective on the bank will come from former Bank of England Deputy Governor Andrew Large, who on Friday will publish the recommendations of his independent review into the bank’s lending to small businesses, commissioned by RBS in July.

Large is expected to be critical of RBS’s lending record since it was rescued by the government via a 45.5 billion pound bailout during the 2008 financial crisis.

The Treasury, aided by investment bank Rothschild and U.S. asset manager BlackRock, has spent four months considering whether RBS should be made to hive off its soured assets into a separate legal entity.

Advocates of a break-up, including former Bank of England Governor Mervyn King and ex-UK finance minister Nigel Lawson, say it would leave the bank better placed to lend and support the British economy. But industry analysts argue it would be too expensive and complicated.

They say RBS has already wound down or sold off the vast majority of its bad loans and the need for approval from RBS’s minority investors makes the plan unworkable.

RBS is set to report an operating profit of 800 million pounds, compared with 1.047 billion the year before, according to forecasts supplied by the bank, reflecting the slimming down of its investment activities in response to political pressure.

NEW YORK (Reuters) – Fannie Mae (FNMA.OB) sued nine of the world’s largest banks on Thursday, accusing them of colluding to manipulate interest rates and seeking more than $800 million of damages.

In a complaint filed in the U.S. District Court in Manhattan, the government-controlled mortgage company accused the banks of conspiring for many years to suppress Libor, or the London Interbank Offered Rate, including during the 2008 financial crisis.

Libor underpins hundreds of trillions of dollars of transactions, and is used to set interest rates on such things as credit cards, student loans and mortgages.

But according to Thursday’s 71-page lawsuit, “defendants’ promises and representations regarding the legitimacy of Libor were false,” causing Fannie Mae to lose money on swaps, mortgages, mortgage securities and other transactions.

The lawsuit adds to the legal headaches over whether banks manipulated Libor and other rate benchmarks to boost profit or appear healthier than they actually were.

Regulators in the United States, Europe and Asia have been investigating many banks over alleged manipulation of Libor and other rate benchmarks.

All nine banks declined to comment. Freddie Mac (FMCC.OB), another government-controlled mortgage company, filed a similar lawsuit in March seeking unspecified damages from more than one dozen banks.

SEEKING FAVORS

The Fannie Mae lawsuit describes emails and other communications that illustrate the alleged collusion.

In one instance, a rate submitter at Rabobank is quoted as having admitted to have “always used to ask if anyone needed a favor and vice versa … a little unethical but always helps to have friends in (the market).”

According to the complaint, the banks’ Libor submissions were “particularly striking” on days where they settled large swap positions with Fannie Mae. The company estimated that it lost $332 million on interest-rate swaps alone.

“Fannie Mae filed this action to recover losses it suffered as a result of the defendants’ manipulation of Libor,” a spokesman said. “We have a responsibility to be good stewards of our resources.”

The U.S. government bailed out Fannie Mae and Freddie Mac in 2008. Both companies are now overseen by the Federal Housing Finance Agency (FHFA), which tries to conserve and recover assets for the benefit of taxpayers.

In 2011, the FHFA sued 18 banks and financial companies to recover losses that it said Fannie Mae and Freddie Mac suffered on about $200 billion of mortgage securities.

JPMorgan last week became the fourth defendant to settle in that litigation, agreeing to pay $4 billion.

Fannie Mae’s lawyers include Kathy Patrick, a partner at Gibbs Bruns who also represents investors that negotiated an $8.5 billion settlement with Bank of America over mortgage securities from the former Countrywide Financial Corp.

Patrick declined to comment on the Fannie Mae lawsuit.

Shares of Fannie Mae closed up 13 cents at $2.34.

The case is Federal National Mortgage Association v. Barclays Bank Plc et al, U.S. District Court, Southern District of New York, No. 13-07720.

(Reporting by Jonathan Stempel in New York; Additional reporting by Karen Freifeld; Editing by John Wallace, Bernard Orr)

LONDON/HOUSTON (Reuters) – Oil industry shareholders concerned about poor returns and costly projects urged executives from Big Oil this week to return cash to shareholders – and at least one of the world’s top five petroleum companies fully acquiesced.

As they posted third-quarter results, the leading oil companies vowed to control spending and to put cash in the pockets of investors through asset sales, share buybacks or dividends while analysts grumbled about lagging stock prices.

BP Plc (BP.L), the smallest of the group of five, was the most aggressive. It raised its dividend, cut back capital spending plans, and ramped up its asset sales target to $10 billion over the next two years from between $4 billion and $6 billion previously – cash that will also go back to shareholders.

Its shares have risen 6.8 percent since Monday’s close.

“At the moment the market likes oil companies that cut back on expenditure and pay out big dividends,” said Malcolm Graham-Wood, analyst and adviser at VSA Capital.

The other companies – Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N), Royal Dutch Shell Plc (RDSa.L) and Total SA (TOTF.PA) – acknowledged spending heavily to prevent output from falling but stopped short of major changes.

Exxon indicated its capital expenditures may subside next year after planned spending of $41 billion this year. It said it has returned $5.8 billion to shareholders in the third quarter through dividends and share repurchases, but did not raise its dividend.

The top five have all badly underperformed the global MSCI World index this year, which is up 20.6 percent for the year to date, even with share buybacks already under way.

The weakest performers are Exxon, whose shares have managed just a 2.6 percent rise, and Shell, down 5.8 percent.

Doug Leggate of Bank of America Merrill Lynch said on Exxon’s results call that its “share price has frankly been pretty awful.”

David Rosenthal, Exxon’s vice president of investor relations, responded by saying, “we are executing on the things that we can control.”

Spurred on by historically high oil prices in the past few years, integrated oil companies have increased exploration work in areas once deemed too risky.

France’s Total, which embarked on a so-called high-risk, high-reward exploration strategy to find massive fields in areas such as the southern African seas, conceded last month it would start what CEO Christophe de Margerie called a “soft landing” in capital expenditure.

Total said it would pay a quarterly dividend of 0.59 euro per share, unchanged from the previous quarter.

Asked why the group did not raise its dividend this quarter like BP, Total said: “It’s not because there are expectations that we have to dance to the market’s tune.”

WAVE OF ACTIVISM IN INDUSTRY

Thomson Reuters data shows there have been pushes for shakeups at 15 different energy companies in the first 10 months of this year – on pace for the industry’s highest number of activist situations in the past decade.

Members of Big Oil have not been hit by the wave of shareholder activism that has struck the energy industry this year, but executives are aware of the pressure.

Shell’s finance director, Simon Henry, warned about the risks of short-term thinking that is gripping the industry – even though Shell is itself buying back $5 billion worth of stock this year and paying out $11 billion in dividends after raising its payout at the end of 2012.

“Those who are cutting capex are being very highly rewarded … 10-15 years ago the entire industry cut capex, obsessed by returns and with the market egging them on, but cutting investment is one of the reasons we’ve got a $110 oil price,” he told reporters after third-quarter results.

Shell, which also said capex would peak this year, was among the cutters last time around as the industry retrenched 10-15 years ago, sacking engineers and pulling back from investments to an extent that made it hard to respond to an upturn.

The company ended that period with a damaging reserves downgrade in 2004 from which it took years to recover.

“What you’re seeing is more of an olive branch being put forward by names like BP and Total than Shell in recent quarters,” said Nomura analyst Theepan Jothilingam, “but one needs to be careful about being positioned for the long term in terms of the right balance between investing for the future and cash return today.”

Reduced spending by the top companies could be bad news for the service firms that provide rigs and help engineer new projects, although French services group Technip (TECF.PA) on Thursday brushed aside those concerns.

“I think this discipline will be applied to investments (in the downstream), and that it remains still very positive for investments in exploration and production,” said Chief Executive Thierry Pilenko.

The third-quarter results themselves were a mixed bag, with BP and Total beating analysts’ expectations, Shell missing, and Exxon landing in line. Weak refining margins – well flagged by the industry – reduced profit across the board compared with a year earlier. Chevron’s results are due out on Friday.

(Additional reporting by Simon Jessop and Sarah Young in London and by Michel Rose in Paris; editing by Will Waterman and Matthew Lewis)

(Reuters) – The number of U.S. small businesses planning to start to offer health coverage for their employees next year slightly exceeds the number that expect to drop coverage, even as costs continue to rise, according to a survey released on Thursday.

The survey by the National Federation of Independent Business, a trade organization, was designed as the first of a three-year look at how small businesses are adapting to President Barack Obama’s healthcare law. The survey did not, however, ask respondents if they were being influenced in their plans to start coverage by the new law.

Many of the Affordable Care Act’s important regulations begin next year, although a requirement that employers with at least 50 workers supply health coverage was delayed until 2015.

If employers follow through on their plans for next year, “the net proportion of them offering (health insurance) would rise, breaking a decade-old trend,” said the report, which surveyed 921 businesses, with from two to 100 employees.

Businesses reported their healthcare costs increased nearly 12 percent on average for this year, and said they responded by taking less profit and delaying business investment, according to the survey.

Health insurance premiums averaged $6,271 a month for small businesses. Sixty-four percent paid more per employee for healthcare than the prior year, with 6 percent reporting a decline and the rest reporting no change. The survey did not ask for reasons behind the cost increases.

About two-thirds of employers reported responding to the higher costs by taking lower profits, while 40 percent said they reduced or delayed business investment. Some also passed the costs onto employees: 37 percent froze or reduced wages and 30 percent raised the employee cost share for healthcare. Also, 30 percent raised their selling prices as a response.

“They are absorbing a lot of that internally right now, which results in less investment in the kinds of things one would hope would occur to expand the economy,” William Dennis, the study’s author and a senior fellow at the NFIB Research Foundation, told reporters in a briefing.

The study also found that 13 percent of businesses plan to cut the hours of part-time workers next year, but that at most half of those cuts related to the healthcare law. The law defines a full-time worker as one who works 30 hours a week. Critics have said that businesses would cut hours of workers to avoid regulations.

NEW YORK (Reuters) – Warehouse retailer BJ’s Wholesale Club BJ.UL is tapping the wide open credit markets for the second time in slightly over 12 months to finance a distribution to its shareholders, sources told Thomson Reuters LPC.

The company is currently in market with a $2.1 billion credit facility that will replace and increase an existing $1.625 billion credit and back a $450 million dividend recapitalization. Deutsche Bank is leading the transaction. Citigroup, Barclays, Jefferies and Morgan Stanley are also lenders in the deal.

Deutsche Bank declined to comment. BJ’s did not return a call for comment by press time.

The $450 million dividend comes on the heels of a $643 million distribution the company offered to shareholders in September 2012. It also follows recent debt-financed dividends that companies such as Arby’s and Pacific Architects Engineers have used to funnel money to shareholders in recent days given the limited opportunities to monetize investments that result from a sluggish mergers and acquisitions market.

“The sponsors are finding a way to extract equity,” said Charles O’Shea, vice president and senior analyst at Moody’s Investors Service. “They’re taking advantage of the low interest rate environment where investors are looking for yield.”

On the dividend recap, Moody’s downgraded BJ’s corporate credit ratings to B3 from B2. Moody’s assigned a Caa1 to BJ’s new first-lien term loan, and a Caa2 to the company’s new second-lien term loan.

The company plans two tack-on loans to an existing $1.625 billion credit that it entered in September 2012 to back the first dividend recapitalization. The facilities included a $1.3 billion first-lien loan and a $325 million second-lien loan.

A $150 million first-lien tack-on loan will increase the existing first-lien to $1.45 billion. A $325 million second-lien tack-on loan will double the existing second-lien term loan to $650 million.

The new $1.45 billion, six-year first-lien term loan is guided at LIB+375-400, with a 1 percent Libor floor, at 99.5. It is expected to carry 101 soft call protection for six months.

Price talk on the $650 million, 6.5-year second-lien term loan is LIB+775-800, with a 1 percent Libor floor, at 99. Call protection on the second-lien term loan is set at 103, 102, 101. The new term loans are expected to be covenant-lite.

The first-lien term loan will mature September 26, 2019, and the second-lien is set to mature March 31, 2020. This is in line with the maturity dates of the $1.625 billion credit. Commitments are due November 8.

In February, BJ’s repriced its existing $1.3 billion first-lien term at a spread of LIB+325, with a 1 percent Libor floor, at par value. The $325 million second-lien term loan priced in September 2012 at a spread of LIB+850, with a 1.25 percent Libor floor, at 99.

Headquartered in Westborough, MA, BJ’s Wholesale Club operates membership warehouse clubs in the Eastern United States, with 200 Clubs in 15 states from Maine to Florida.

The company announced its acquisition by private equity firms Leonard Green Partners and CVC Capital Partners in 2011.